The Business of Doing Good: Supporting the Social Enterprise Sector

When I talk about my work in social entrepreneurship, people often ask, “Why is the World Bank interested in social enterprises?” I let numbers answer the question.

Over one billion people don’t have access to the health services they need, 783 million people live without clean drinking water, and 780 million adults lack basic reading and writing skills. There are too many unserved needs as the bottom of the pyramid and there is just not enough public funding to provide these services.

Where public sector services are absent or inadequate and the market is too risky and not profitable enough for the private sector, often, we see social enterprises stepping in to provide effective—and cheaper—solutions for service delivery to the poor.

For example, in Kenya, we met a social entrepreneur that was able to bring down the price of clean treated water from ten shillings per liter (the market rate) to three shillings per liter. This may keep his profits the same, but he knows it makes it more affordable for a larger segment of the population.
Photo by Elaine Tinsley / World Bank Group
Currently, he is working to adapt his model so that the price can go down even further to one shilling per liter, making it even more accessible. He’s also improving his distribution strategy by partnering with small neighborhood kiosks to install water vending machines in their shops. It’s a win-win situation: the local kiosks can increase their business with more customers, while local residents don’t need to travel long distances to fill their water canisters.

Where there are intractable development challenges—whether it’s lack of sanitation in the slums or low-quality education in poor neighborhoods—we have found inclusive innovations from social enterprises that are solving them. Driven by their desire for impact, social enterprises are the R&D labs that innovate their products and services to develop and bring to market business solutions accessible to the poor. In a social enterprise, the poor are not just beneficiaries, but rather empowered customers who can choose to support the business or not. It’s not cheap products they need, it’s high value for money; and social enterprises strive to respond to this market.

The World Bank Group recognizes the important role that social enterprises can play in the development agenda. In the past, the Bank supported innovative enterprises through our Development Marketplace grant competitions. More recently, to broaden impact, the Bank has shifted from supporting individual enterprises to promoting the sector as a whole. To build a more conducive ecosystem for social enterprises, the support of the government is key. Social enterprises should, in fact, be natural allies for governments, as their primary goal is to improve service delivery or the lives of the poor with little to no strain on public resources. For many countries, however, social enterprises are a rather nascent sector in the economy, and governments may not be aware of their potential, nor understand how their needs differ from private enterprises or NGOs.

Social Enterprise Business Models. This on-going body of work demonstrates how impactful and cost-effective social enterprise solutions can be by aggregating social enterprises into different business models­, for example, low-cost schools, decentralized water treatment, empowered community health workers, ICT agricultural extension services, etc. These models also highlight potential solutions that could be replicated in other contexts.

Ecosystem Diagnostic. This diagnostic helps governments evaluate the current social enterprise ecosystem in their country. By analyzing key indicators, such as financing, regulations, networks, and presence of enablers, the toolkit helps identify gaps and policy recommendations needed to support the sector.

Capacity Building and Policy Tools. The Bank offers a course on social enterprises to introduce policy makers to the different social entrepreneurship models and the set of policy tools that can be deployed to support and engage them, including crowdsourcing, public-private partnerships, social impact bonds, and other result-based financing tools.

Reaching the last mile requires being innovative in driving down costs and coming up with new, sustainable solutions to old service delivery issues. Social enterprises can play a significant role but we need to improve their playing field.